Corporate Overview September 2019
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Corporate Overview
September 2019
1
Forward-Looking Statements
This presentation includes forward-looking statements that reflect our current views with respect to, among other things, our plans to develop and
commercialize our product candidates, including our interpretation of preclinical and clinical studies and the success and timing of our product
development activities and clinical trials, our intention to advance the development of certain product candidates, including SB206 for the treatment
of molluscum, SB204 for the treatment of acne and SB414 for the treatment of atopic dermatitis, the expected financial and other benefits of
existing and future financing arrangements, expansion of our network of business partners and collaborations, the future prospects of our business
and our product candidates. These forward-looking statements are included throughout this presentation. We have used the words “anticipate,”
“assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,”
“foreseeable”, “targeted” and similar terms and phrases to identify forward-looking statements in this presentation. The forward-looking statements
contained in this presentation are based on management’s current expectations and are subject to substantial risks, uncertainty and changes in
circumstances. Actual results may differ materially from these expectations due to risks and uncertainties including, but not limited to: risks and
uncertainties in the clinical development process, including, among others, length, expense, ability to enroll patients, reliance on third parties, and
that results of earlier research and preclinical or clinical trials may not be predictive of results, conclusions or interpretations of later research or
trials; risks related to the regulatory approval process, which is lengthy, time-consuming and inherently unpredictable; risks related to the
manufacture of clinical trial materials and commercial supplies of any potentially approved product candidates, including the manufacture of our
NVN1000 active pharmaceutical ingredient in our primary facility, our internal manufacturing capabilities and our ability to transfer technology and
processes as contemplated by the manufacturing agreement; our ability to secure the grants described within and any other grants, including the
amount and timing of any grants to support funding for a women’s health product candidate; our ability to obtain substantial additional funding for
the further advancement and development of our product candidates; our ability to identify and enter into strategic relationships for the further
development and potential commercialization of our product candidates; the risk we will note be able to utilize the full amount under the facility with
Aspire Capital Fund LLC on favorable timing or price terms or otherwise; and other risks and uncertainties described in our annual report filed with
the SEC on Form 10-K for the twelve months ended Dec. 31, 2018, and in any subsequent filings with the SEC. Any forward-looking statement
made by us in this presentation speaks only as of the date of this presentation. We undertake no obligation to publicly update or review any
forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable
securities laws.
2
Science & Technology
Macromolecular platform to achieve stable, tunable and druggable
delivery of nitric oxide
Stable Tunable Druggable
Real-Time Nitric Oxide Release
Extended Tail
Initial Burst
New
Chemical
Entity
(NCE)
Proprietary platform enabling
development of NCEs with Proprietary formulations, Multiple drug candidates with
sustained delivery of nitric targeted to each indication, unique nitric oxide delivery and
oxide enable tunable dosing proven target engagement
3
Topical Berdazimer Sodium Formulation Science
• Nitric oxide (NO), an endogenous small molecule, provides localized immunity against foreign
organisms by acting both as a short-lived immune modulator and a direct broad-spectrum
antimicrobial agent.1
• Until recently, the development of topical NO treatments was limited by the inability to store
and safely deliver NO to the site of infection or inflammation.
• Berdazimer sodium is a macromolecule comprised of a polysiloxane backbone with covalently
bound N-diazeniumdiolate NO donors.
• Coadministration with a hydrogel promotes NO release from the macromolecule at the time of
application.1
− Formulation engineering specific to disease target
− Illustrative example from Novan’s SB206 molluscum Phase 2 trial:
Two components: Hydroalcoholic gel with nitric
(1) Berdazimer sodium alcohol gel oxide release, targeting viral
(2) pH buffered hydrogel skin infections
1. Stasko N, McHale K, Hollenbach SJ, Martin M, Doxey R. Nitric oxide-releasing macromolecule exhibits broad-spectrum antifungal activity and utility as a topical treatment for superficial fungal infections. Antimicrob
Agents Chemother. 2018;62(7):e01026-17. doi:10.1128/AAC.01026-17. 4
Development Pipeline
Product
Indication Preclinical Phase 1 Phase 2 Phase 3
Candidates
DERMATOLOGY
SB206 Molluscum
Atopic Dermatitis
SB414
Psoriasis
SB204 Acne Vulgaris
SB208 Tinea Pedis
MEN’S AND WOMEN’S HEALTH
SB206 Genital Warts
WH504 High-Risk HPV
WH602 High-Risk HPV
GASTROENTEROLOGY
Undisclosed Various
5
Molluscum Overview
Contagious skin infection caused by • Prevalence of ~6 million in the
the molluscipoxvirus, a double- US1,2,3
stranded DNA virus − ~1-2 million diagnosed annually
− ~90% of patients below the age of 18
• Typically present with 10-30
lesions, up to 100 in severe cases
− Avg. time to resolution is 13 months2
• No FDA-approved treatments
indicated for molluscum
1. QuintilesIMS. Market Opportunity Assessment EGW, Common Warts and Molluscum, March 2017 (Jul’14-Jun’16 Study Period) 2. Olsen JR et al. Lancet Infect Dis. 2015;15:190-5. 3. Sell-side
analyst reports 6
No FDA-Approved Treatments Indicated for Molluscum
Choice of 1st Line
Description Side-Effects/Limitations Treatment1
Physical ▪Curettage, cryotherapy, laser ▪Pain, anxiety, burning,
29%
Therapies surgery erythema, dyspigmentation
▪Applied with wooden end of
▪Blistering agent
Cantharidin cotton-tipped swab 20%
▪Erythema, pruritus
▪Compounding pharmacies
Off-Label ▪Imiquimod ▪Limited efficacy
33%
Rx’s ▪Retinoids ▪Erythema, burning, pruritus
▪Home remedies ▪Unproven efficacy
OTC 15%
▪ZymaDerm, salicylic acid ▪Some irritation
SB206, as the most advanced take-home topical product candidate in development, if approved, could potentially
gain substantial share of the ~50% of patients currently receiving off-label Rx’s or OTC therapies
1. IQVIA Quant Survey (n=101, 51 peds; 50 derms) – physician choice for pediatric patients
7
SB206 Anti-Viral Mechanism of Action
Publications demonstrate Non-clinical and Translation into other Non-clinical and
nitric oxide’s ability to clinical HPV data (e.g. double-stranded DNA clinical data support
inhibit viral replication EGW) viruses molluscum
▪ Double-stranded DNA- ▪ Novan’s nitric oxide ▪ Inhibition demonstrated ▪ Novan’s nitric oxide
viruses: technology has in HPV is hypothesized technology has
demonstrated: to be translatable to demonstrated:
− Human other double-stranded
papillomavirus (HPV) − The ability to inhibit DNA virus families: − The ability to inhibit
HPV amplification vaccinia, a pox virus,
− Herpes simplex virus and replication in − Poxviridae (e.g. amplification and
(HSV) nonclinical models molluscipoxvirus) replication in vitro
▪ Single-stranded RNA − Efficacy in a Phase 2 − Adenoviridae − Efficacy in a Phase 2
viruses: clinical trial against clinical trial against
external genital warts − Polymoviridae molluscum
− Coxsackievirus
contagiosum
− Dengue virus
Sources: Colasanti, M. et al. S-Nitrosylation of Viral Proteins: Molecular Bases for Antiviral Effect of Nitric Oxide IUBMB Life; 1999 (48) 25-31. Kroen, KD. J Clin Invest. 1993;91(6):2446-2452.; Karupiah, G; et al. Science.
1993;261(5127):1445-1448. Saura, M; et al. Immunity. 1999;10:21-28. Takhampunya, R; et al. J Gen Virol. 2006;87:3003-3011. McHale, K et al. In Vitro and In Vivo Efficacy of Nitric Oxide-Releasing Antiviral Therapeutic
Agents Society for Investigative Dermatology Annual Meeting 2016 .
8
SB206 Phase 2 Molluscum: Efficacy Results (Dec 2018)
Primary Endpoint: Complete Clearance of All Lesions1 Secondary Endpoint: % Change from Baseline Lesion Count (mITT)
*pSB206 Phase 2 Molluscum: Safety Results (Dec-18)
SB206 SB206 SB206 SB206
Vehicle Overall
4% BID 8% BID 12% BID 12% QD
Safety Population1 66 46 48 47 47 254
Completed Study 61 (92.4%) 38 (82.6%) 40 (83.3%) 39 (83.0%) 43 (91.5%) 160 (85.1%)
TEAE2 Leading to Discontinuation 0 3 (6.5%) 2 (4.2%) 2 (4.3%) 0 7 (2.8%)
Subjects with at least one TEAE 19 (28.8%) 19 (41.3%) 24 (50.0%) 20 (42.6%) 19 (40.4%) 101 (39.8%)
Application site erythema 0 3 (6.5%) 6 (12.5%) 6 (12.8%) 5 (10.6%) 20 (10.6%)
Application site pruritus 0 1 (2.2%) 1 (2.1%) 4 (8.5%) 2 (4.3%) 8 (4.3%)
Application site pain 0 2 (4.3%) 3 (6.3%) 3 (6.4%) 4 (8.5%) 12 (6.4%)
1. Safety Population: consists of all subjects who are administered study drug
2. TEAE: Treatment Emergent Adverse Event 10SB206 Phase 2 Molluscum (12% QD): Patient Photo Before and After
* All 19 lesions not visible in photo; no Adverse Events reported for patient; 100% compliance reported by patient
11SB206 Pivotal Phase 3 Trials (B-SIMPLE11, B-SIMPLE22) in Molluscum
• Multi-center, randomized, double-blind, vehicle-controlled, parallel group trials to evaluate the efficacy
Description and safety of SB206 12% QD for the treatment of molluscum
• 340 subjects per pivotal trial
• 2:1 (active:vehicle) randomization
• 14 day wash out period prior to randomization
Trial Design • Subjects or their caregivers will apply SB206 12% or Vehicle Gel once daily for a minimum of 4 weeks
and up to 12 weeks to all treatable lesions (baseline and new)
• Visits at Screening/Baseline, Week 2, Week 4, Week 8, Week 12 and safety follow-up at Week 24
Key Inclusion • Males and females, 6 months of age and older
Criteria • 3-70 lesions at baseline
Primary
• Proportion of subjects with complete clearance of all treatable molluscum lesions at Week 12
Endpoint
Secondary & • Proportion of subjects with complete clearance of all treatable molluscum lesions at each visit
• Proportion of subjects achieving ≥75% reduction from baseline in number of molluscum lesions
Exploratory • Mean % change from baseline in number of molluscum lesions at every visit
Endpoints • Time to complete clearance
1. B-SIMPLE1 2. B-SIMPLE2
12Molluscum: Execution of Pivotal Phase 3
• End-of-Phase 2 FDA meeting with
FDA completed with written minutes
Top line efficacy and received ‘within one day’ during
March 2019
safety results:
expected ‘no later • Patient enrollment and dosing in “B-
SIMPLE” (Berdazimer Sodium In
than’ early 1Q 2020 Molluscum Patients with Lesions)
Phase 3 well underway in multiple
sites
• Patient enrollment completed as of
August 13, 2019
13Atopic Dermatitis Overview
• ~22M Americans suffer from mild-to-moderate
AD1
− ~80% of disease burden
• Typically patients are treated first line with topical
therapies
− Corticosteroids, calcineurin inhibitors and PDE4
inhibitors
• Nitric oxide targets the NLRP3 inflammasome and
has the ability to impact multiple mechanisms of
the disease2
1. https://nationaleczema.org/research/eczema-facts/ 2. Nat Rev Drug Discov. 2018 Aug;17(8):588-606. doi: 10.1038/nrd.2018.97. Epub 2018 Jul 20. Bruchard, M. et al. 2015. Nat. Immunol. 16(8):859-870.; Ting, J. et
al. 2015 Nat. Immunol. 16(8):794-796.; Mishra B et al. Nat. Immunol. 2013; 14(1):52-60; Hollenbach, S. Effects of SB414 Cream on S. aureus and Tissue Cytokines in an Atopic Dermatitis Mouse Model. Presented at
2018 IID..
14Perceived Ranking of Atopic Dermatitis Treatments
7.0
6.0 High-Potency Topical Biologics
Efficacy Corticosteroids (e.g. IL-13/IL-4 inhibitors)
JAK/SYK
Efficacy
5.0 Inhibitors
Favorable
SB414
Mid-Potency Topical Target
Perceived
4.0
Corticosteroids Product
Profile
More
Topical Calcineurin
Inhibitors
3.0
Topical PDE4
Inhibitors
Low-Potency Topical
Corticosteroids
2.0
3.0 4.0 5.0 6.0 7.0
MorePerceived
Favorable Safety
Safety
Note: Novan market research was derived from a survey of n=13 key opinion leaders in the atopic dermatitis space. The classes were rated on a scale of 1-7 (1 is least efficacious or unfavorable, 7 is
most efficacious or favorable) for their perceived efficacy and safety in the treatment of atopic dermatitis regardless of the severity, location, or duration restriction on the label. 15SB414 Phase 1b Trial Design for Atopic Dermatitis
• Multi-center, randomized, double-blind, vehicle-controlled trial to evaluate the PK/PD, safety, and
Description tolerability of SB414 for the treatment of atopic dermatitis
• 48 subjects
• 2:1 (active:vehicle) randomization
• Active arms: SB414 2%, SB414 6%
Trial Design • 14 day wash out period prior to randomization
• Subjects will apply the study drug (SB414 or Vehicle) to affected areas twice daily for 2 weeks (14
days)
Key Inclusion • Male or female, 18 years of age and older
Criteria • EASI score >1 and ≤21, involving ≥5% body surface area (BSA)
• Assess IL-4, IL-5, IL-13, and other key inflammatory cytokines
• Safety and cutaneous tolerability (investigator and subject assessment)
Study
• Systemic exposure via PK assessments of NVN1000 on Day 1 and Day 14
Objectives • Efficacy as measured by EASI (Eczema Area and Severity Index) score and Itch NRS (a 10-point
numerical rating scale reported by the patient)
16SB414 Phase 1b Atopic Dermatitis Trial Results (Aug 2018)
Vehicle SB414 2% SB414 6%
(N=14) (N=17) (N=17)
Fold Change in Biomarkers over Vehicle at Wk 2
IL-4R - -2.5* -1.7
IL-5 - -7.1* -4.2
Confirmation of key
IL-13 - -10.5* -3.6 biomarker
IL-17A - -7.4* -1.0 downregulation
IL-22 - -7.5* -1.8
Eczema Area and Severity Index (EASI) at Wk 2
Mean Change -1.0 -1.2 -1.8 Larger reductions in
SB414 treated
Median % Reduction 15.8% 28.6% 25.8% groups
Pruritus (Itch) Numeric Rating Scale (NRS) at Wk 2
≥ 3-point reduction (%) 43% 71% 59% Strong anti-pruritic
≥ 4-point reduction (%) 29% 59% 41% effect
Treatment-Emergent Adverse Events (TEAE)
General Disorders and Administration Site
2 (14.3%) 0 (0%) 2 (11.8%) Low TEAEs
Conditions (%)
17Biomarker Results: LS vs NL Transcriptome Improvement from Baseline (FCH>2, FDR
SB414 Atopic Dermatitis Path Forward
• In August 2018, announced promising
clinical results
Clinical startup − Clinical efficacy measures highly correlated with
critical and disease-relevant biomarker changes
procedures for
• Initiated non-clinical studies in 2Q 2019
Phase 2 program to support Phase 2 program launch
targeted to initiate
• Phase 2 trial design
in 4Q 2019 − 2-3 active treatment arms
− Ages 12 and up
− 100-150 patients
− ≥8 weeks of treatment
19SB204 Acne Vulgaris Path Forward
• In January of 2017, announced
mixed top-line results from two
One additional identically designed Phase 3
pivotal clinical trials
pivotal Phase 3 trial
in moderate-to- • Several areas identified to optimize
trial execution for confirmatory
severe acne patients Phase 3 trial
most pragmatic path • Advancing SB204 to occur as
additional capital is obtained, with
forward timeline to be determined
20Nitric Oxide has Broad Applicability
Dermatology
Women’s Health
Current Late-Stage
Candidates
Gastroenterology
Ophthalmology
N
Respiratory
O
Urology, Cardiology,
Oncology, etc.
Platform Technology
21Key Activities and Milestones: Recent and Targeted
SB206 Molluscum SB414 Atopic Dermatitis SB204 Acne Platform Corporate & Partnerships
GI diseases added as a field of Initiate SB206 Phase 3 trials in Initiate SB414 Phase 2 clinical startup
1Q19 2Q19 2H19
focus molluscum procedures in atopic dermatitis
End of Phase 2 meeting (and Execute agreement with drug Last patient completes treatment in
1Q19 2Q19 4Q19
minutes) for SB206/molluscum substance CMO SB206 Phase 3 trials in molluscum
Secured up to $35M in product-
Complete enrollment in SB206 Phase 3
2Q19 based financing from Reedy 4Q19
trials in molluscum
Creek Investments LLC
2018 2019 2020
SB414 Phase 1b top line Formation of a Women’s Health unit SB206 Phase 3 top line results in
3Q18 4Q18 1Q201
results in atopic dermatitis and collaboration with Health Decisions molluscum (12-week treatment)
Executed agreement with drug
3Q18 SB204 FDA clarity for acne 4Q18
product CMO, Orion Corporation
Extension of nitric oxide SB206 Phase 2 top line results in
4Q18 4Q18
partnership with Sato in Japan molluscum
1. No later than the early part of the first quarter of 2020
22Patent Approach
• API
− Co-condensed Silica Compound
− Co-condensation Process
Anti-Viral
− Water-soluble Polyglucosamine
− Tunable Nitric Oxide-Releasing Macromolecules
Topicals
• Formulation
− Alcohol Gel
Anti-Inflammatory
− Method of Manufacture of Alcohol Gel
Anti-Fungal
− Alcohol Gel/Hydrogel Admixture Formulation Core Nitric Oxide
Releasing
− Ointment Technology
− Ointment/Hydrogel Admixture
− Self-emulsifying Cream
− Low-alcohol Gel and Admixture
− Nail Coatings
− Bath Compositions
Multi-Factorial
• Therapeutic Use Diseases
− Sebum Reduction
− Treating a Skin Ailment
− Topical Anti-viral
− Treating an Infection
23Over 25 issued US patents, over 35 issued non-US patents and
over 60 pending applications throughout the world
Issued Patents
Covered Patent Life
(Pending Applications)
NitricilTM Technology
US, Canada, Japan, Australia, Italy, (US, Canada,
Composition of Matter to 2026
EUR)
➢ Family of Compounds – 8,282,967
➢ NVN1000 Composition – 8,956,658
US, China, Switzerland, Germany, Spain,
Method of Manufacture to 2032
France, Great Britain, Ireland, Italy
Formulation Science
Formulation Composition and Manufacture to 2032 or 2033 US, Australia, China, Japan (US, Canada, Brazil,
➢ Gels EUR)
➢ Ointments
Admixture Composition to 2034 US, Australia (US, Japan, China, Australia,
➢ Hydroalcoholic gels Canada, Brazil, South Korea, EUR)
➢ Creams
Therapeutic Uses US, Germany, Spain, France, Great Britain,
Ireland, Italy, Australia, China, Japan, South
Methods of Reducing Sebum Production to 2031
Korea, Mexico
(Canada, Brazil)
Topical Antiviral Compositions and Methods of Using the US (US, Australia, Canada, China, EUR, Japan,
Same to 2035
South Korea)
24Operational & Business Model Update
• Drug Substance and Drug Product Manufacturing
− Secured Orion as drug product partner; technology transfer on-going1
− Secured third party for drug substance; technology transfer on-going2
• Real Estate3
− Executed a non-binding letter of intent with a third party with the goal of
negotiating an agreement that releases Novan from current lease
− Objective is to reach a binding agreement no later than the end of 3Q 2019
− A successful transaction would lead to a reduction in legacy infrastructure and
associated costs
• Integration of Additional External Expertise
− MedPharm: strategic partner on analytics and formulation science2
− Cilatus: strategic partner on supply chain, manufacturing and engineering
1. Novan Extends Technical Production Capacity and Reaches Agreement with Orion Corporation
2. Novan Expands External Business Partner Network 25
3. Novan Takes Steps to Reduce Real Estate FootprintCorporate and Financial Information
• Formed in 2008; technology spun out of University of North Carolina Chapel Hill
• Publicly listed on the Nasdaq stock exchange in September 2016 (ticker: NOVN)
• Cash, cash equivalents and restricted cash: ~$32.8M as of 6/30/19
• $95.8M of total capital raised since Jan. 2018
− $35.2M common equity
− $60.6M non-dilutive transactions:
• $13.4M from Sato Pharmaceuticals1
• $35.0M from Reedy Creek Investments LLC2
• $12.0M from Ligand Pharmaceuticals
• ~$223K from National Institutes of Health (NIH)
• $25.0M equity financing structure agreed with Aspire Capital Fund LLC in Sep. 2019
• Cash runway3:
− Through top line results of the molluscum Phase 3
− Into 2Q 2020 with receipt of $10M contingent payment from Reedy Creek
1. Includes $4.4M contractual 3rd installment of upfront payment expected in 4Q 2019
2. Includes $10.0M contingent payment on successful Ph 3 results
3. Please reference Form 10-Q filed with the SEC for the quarter ended 6/30/19; excludes any potential utilization of the Aspire Capital Common Stock Purchase Agreement 26Leadership Team
Robert A. Ingram
Executive Chairman
G. Kelly Martin Paula Brown Stafford
Chief Executive Officer President, Chief Operating Officer
Carri Geer, PhD Elizabeth Messersmith, PhD
SVP, Chief Technology Officer SVP, Chief Development Officer
John M. Gay Tomoko Maeda-Chubachi, MD
VP, Finance and Corporate Controller VP, Medical Dermatology
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